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Foreign Trade and Income Convergence in Latin America

Author

Listed:
  • Evânio M. Paulo

    (Department of Economics, Federal University of Roraima, Ave. Ene Garcez, 2413, Boa Vista 69310-000, Brazil
    These authors contributed equally to this work.)

  • Osmar T. Souza

    (Business School, Pontifical Catholic University of Rio Grande do Sul, Porto Alegre 90619-900, Brazil
    These authors contributed equally to this work.)

Abstract

This paper explores the variation in inequality as a measure of convergence or divergence in per capita income. It is proposed to decompose this variation into different selected categories of foreign trade, especially due to technological intensity and intraregional and interregional trade. The first category of selection helps to understand how the different stages of development of foreign trade are associated with the convergence of per capita income between nations. The second perception shows whether regional integration actions have had any effect on the region’s convergence. As a result, there is evidence of absolute convergence for the sample of Latin American countries and territories selected in the 1995–2017 period. The convergence was on the order of 16.7% and became more intense after 2004; however, it decelerated in the most recent period which is characterized by a phase of lower growth. The important participation of foreign trade in determining regional asymmetries in Latin America is confirmed and a significant effect of intraregional trade in the sense of reducing inequality.

Suggested Citation

  • Evânio M. Paulo & Osmar T. Souza, 2023. "Foreign Trade and Income Convergence in Latin America," Economies, MDPI, vol. 11(9), pages 1-19, September.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:9:p:235-:d:1239126
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    References listed on IDEAS

    as
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    2. Candelaria Barrios & Esther Flores & M. Ángeles Martínez, 2019. "Convergence clubs in Latin America," Applied Economics Letters, Taylor & Francis Journals, vol. 26(1), pages 16-20, January.
    3. Alan King & Carlyn Ramlogan-Dobson, 2016. "Is there club convergence in Latin America?," Empirical Economics, Springer, vol. 51(3), pages 1011-1031, November.
    4. Stephen P. Jenkins & Philippe Van Kerm, 2009. "Decomposition of inequality change into pro-poor growth and mobility components: -dsginideco-," United Kingdom Stata Users' Group Meetings 2009 11, Stata Users Group.
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